Cell Phone Demand and Consumer Learning – An Empirical Analysis

Martin Gaynor, Yunfeng Shi (), Rahul Telang and William Vogt ()
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Yunfeng Shi: H. John Heinz III School of Public Policy and Management Carnegie Mellon University

No 05-28, Working Papers from NET Institute

Abstract: A structural model is used in this paper to analyze the demand and learning behavior in cell phone market. We assume that the cell phone consumption can be divided into a high-value part and a low-value part. The consumers are assumed to be uncertain about the exogenous shock of the need for high-value usage and also their preferences over the low-value usage. Meanwhile, we assume that the consumers’ knowledge improves over time. As a result, the match between their plan choice and consumption pattern becomes better. Such a learning behavior is supported by the data set. Bayesian updating is used to represent the learning. The estimates of the parameters are obtained and compared to the benchmarks from previous research.

Pages: 28 pages
Date: 2005-10, Revised 2005-10
New Economics Papers: this item is included in nep-mkt and nep-tid
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Citations: View citations in EconPapers (1)

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